Chapter 9: Reducing Project Duration

1. Chapter 9: Reducing Project Duration • Rationale • Time Is Money: Cost-Time Tradeoffs • Reducing the time of a critical activity usually incurs additional direct costs. • Cost-time solutions focus on reducing (crashing) activities on the critical path to shorten overall duration of the project. • Reasons for imposed project duration dates: • Customer requirements and contract commitments • Time-to-market pressures • Incentive contracts (bonuses for early completion) • Unforeseen delays • Overhead and goodwill costs • Pressure to move resources to other projects

2. Adding resources Outsourcing project work Scheduling overtime Establishing a core project team Do it twice - fast and correctly Fast-tracking Critical-chain Reducing project scope Compromise quality Options for accelerating project completion

3. Explanation of project costs • Project Indirect Costs • Costs that cannot be associated with any particular work package or project activity • Supervision, administration, consultants, and interest • Costs that vary (increase) with time • Reducing project time directly reduces indirect costs. • Direct Costs • Normal costs that can be assigned directly to a specific work package or project activity • Labor, materials, equipment, and subcontractors • Crashing activities increases direct costs

4. Identifying direct costs to reduce project time Gather information about direct and indirect costs of specific project durations. Search critical activities for lowest direct-cost activities to shorten project duration. Compute total costs for specific durations and compare to benefits of reducing project time. Reducing project duration to reduce project cost

5. Project cost-duration graph FIGURE 9.1

6. Constructing a project cost-duration graph • Find total direct costs for selected project durations. • Find total indirect costs for selected project durations. • Sum direct and indirect costs for these selected project durations. • Compare additional cost alternatives for benefits.

7. Constructing a project cost-duration graph • Determining Activities to Shorten • Shorten the activities with the smallest increase in cost per unit of time. • Assumptions: • The cost relationship is linear. • Normal time assumes low-cost, efficient methods to complete the activity. • Crash time represents a limit—the greatest time reduction possible under realistic conditions. • Slope represents a constant cost per unit of time. • All accelerations must occur within the normal and crash times.

8. Activity graph FIGURE 9.2

9. Cost-duration trade-off example FIGURE 9.3

10. Cost-duration trade-off example (cont’d) FIGURE 9.3 (cont’d)

11. Cost-duration trade-off example (cont’d) FIGURE 9.4

12. Cost-duration trade-off example (cont’d) FIGURE 9.4 (cont’d)

13. Cost-duration trade-off example (cont’d) FIGURE 9.4 (cont’d)

14. Summary costs by duration FIGURE 9.5

15. Project cost-duration graph FIGURE 9.6

16. Practical considerations • Using the project cost - duration graph • Crash times • Linearity assumption • Choice of activities to crash revisited • Time reduction decisions and sensitivity

17. What if cost, not time is the issue? • Commonly used options for cutting costs • Reduce project scope • Have owner take on more responsibility • Outsourcing project activities or even the entire project • Brainstorming cost savings options